This is a general comment only and does not constitute advice. Before making financial decisions you should seek advice from a professional adviser, who can take into account your specific circumstances and investment goals.

In response to the "was the govt "right" in offering the grants or not" I think the answer yes and no.

Big nationwide property price falls crush economies. It's just a sad reality that most Australian households have a massive chunk of their wealth tied up in their own home. So big housing price corrections are generally quite debilitating for wider economy that is driven by consumption, often "frivolous" consumption.

So was the government right? well you have to say having watched the US and UK property markets tank and taking their economies with them you can't "blame" the government trying to throw a little fuel onto the embers that were left from the Australian house price explosion.

So I can see that the boost probably helped in the short term. Over the longer term you have to think that what will be will be and eventually the mountains of both government and private household debt will need to be repaid and at this point I'm sure growth in the property maker will be a lot leaner.

So IMO probably the right decision looking at it from the short term, but it won't make a difference in the long term therefore was probably a waste of money.

As for that article you linked to I thought these two points were interesting ideas...

It's obvious that property prices in the first home buyer market have risen by more than the value of the grant. This could easily have been prevented if:

- The first home grant must be paid back during an interest-free period: Just like HECS ensures people pay back their university fees, why couldn't we create first home grants that people pay back? Surely this would limit the run-up of prices if people think they have to return the money.

- Restrict the grant to new homes and apartments only: This would increase supply of property and ease the pressure on property prices rather than allow the cost of established houses to be bid up by public money.

It was a success in helping keep many builders, electritians, plumbers, carpenters, REAs and loan managers, etc, employed and solvent when major building projects were failing through lack of off-shore funding. So good for employment, but I think the question was more about property

As first home buyers generally buy below the median price band, more activity in this segment should lower the median house price. However, the funds flow through to the providers (those identified above) exactly the same as they did last almost ten years ago. This helped trigger the last boom ... which was at higher interest rates (now higher prices take their place). Ironically, it's this housing segment that inflates the most, at the expense of first home owners who didn't get the grant. So it's another longer-term failure on that count.

Prices then flowed through to houses in the median price band. The fundamentals of supply and demand here have been less influenced by the FHOG, and its been pretty dull there for some years now. It seems to be starting to move now Minimal impact from the FHOG.

Comparisons with the US and UK, like this article, are always dangerous. The great US housing collapse is not as widespread as the media makes out. A few areas suffered really badly, others have done very little. If a previous president hadn't pushed lenders into funding those who couldn't afford to repay (and then bundling the loans into wierd financial instruments), we wouldn't see these headlines.

The US and UK also have different housing stock (something that academic comprisons seem to miss). Our freestanding houses on their own urban-sprawl blocks are relative luxuries over there (excluding Hollywood of course). If we had a lot more people in attached housing, low-grade flats (UK & US) and trailer parks (US) , our house price to earnings ratio would be a lot lower too. Perhaps our ratio will drop as the McMansion craze dies, blocks become smaller, and cheaper apartments become more common.

my 2c worth.

This is a general comment, opinion or view on experience and does not constitute advice. Spelling and grammatical errors included to add character and originality!